Former Office of Management and Budget Director Bert Lance asserted today that he has restored his "financial viability" and gained vindication for his controversial banking dealings by selling 60 per cent of his shares in the National Bank of Georgia to a Saudi Arabian businessman.
Lance and the Saudi financier, Ghaith R. Pharoan, both sharply denied at an Atlanta news conference that Lance's continuing friendship with President Carter and his access to the White House had any influence on Pharoan's decision to buy the stock for $20 a share, $3 a share more than Lance paid in 1975 and nearly double the stock's trading value four weeks ago.
"I am not for sale. I have never been for sale," Lance retorted to a questioner at the news conference, which was called to introduce Pharoan to the Atlanta media and to announce that the National Bank of Georgia's board of directors had today approved procedural steps for the expected purchase of 60 per cent of all outstanding stock by Pharoan.
The Georgian and the Saudi indicated in general terms that they were discussing other business arrangements, but they declined to give any details.
Sources close to the negotiations reported, however, that the two men were going ahead with plans to form an offshore holding company that Lance would head as chief executive officer.
The company would channel Arab oil money into American investments. One potential annual salary level mentioned to Lance in the discussions, according to the sources, has been $300,000 plus commissions.
A preliminary description of Lance's future employment had been included in the first draft of the stock-purchase agreement drawn up by Pharoan's lawyer, the sources said, but it was deemed "not appropriate to be included in the final document."
Lance resigned as budget director in September after following intense scrutiny and criticism of his use of extensive overdrafts, corporate aircraft and depositors' funds at the Atlanta bank and earlier at Calhoun (Georgia) First National Bank, where he was also chairman.
The initial scrutiny was triggered when the National Bank of Georgia suspended dividend payments early last year and the price of the bank's stock plummeted. Since his resignation, Lance has appeared to be almost totally dependent on the sale of the stock at a premium price to meet his payments due on a $3.4 million loan from the First National Bank of Chicago and his other expenses.
"My chief aim has been to restore financial viability, and I think I've done that" with the sale of the 120,000 shares of the bank stock to Pharaon, Lance told reporters today. He added that Pharaon's willingness to pay a premium for the stock vindicated Lance's earlier argument that the stock's value had been higher - and his financial position sounder - than his critics would accept.
"If indeed there ever were any sick loans . . . I think this covers that and makes them well again," Lance said. "This puts me in a position where I'm not in the unemployment line."
Pharaon, 37, an American-educated Saudi who has made a fortune out of the construction business in his country and whose family is part of the inner circle in the royal Saudi court, repeatedly defended his purchase as being nothing more than "a good investment" in a region he said he expects will expand economically.
"Why should I buy influence?" he asked. "We have many ways of reaching your President through our channels. We have a great deal of influence already."
Pharaon, whose purchase of part of the stock held by Lance and two or three other shareholders, will give him control of the bank, justified his decision by predicting he would get his money back in two or three years, when, he said, the stock would be selling for $35 a share.
He expressed high regard for Lance as "the kind of man we want to work with." Pharaon said he is interested in further investment in the United States and would welcome any business of that sort that came through Lance.
Lance is currently under investigation by the Securities and Exchange Commission and a grand jury in Atlanta in connection with his financial dealings. A three-man Justice Department team is reviewing evidence gathered by the SEC and other agencies.
"We did not discuss Mr. Lance's problems" during the negotiations. Pharaon asserted, adding that he had met Lance only recently through a Pakistani friend and business associate.
Pharaon said he was "happy" if his offer had indeed helped Lance out of a hole, "but that was not the purpose. If I made business decisions based on that I would not be where I am today.
Why should I want to bail someone out and put myself in a hole?"
Except for Lance's open bitterness toward those who have charged him with making "sick loans," the news confernce and board meeting that preceded it were low-key in tone.
Banking sources said that at least two of the board's three Jewish directors had initial misgivings about the sale of the controlling interests of the bank to a Saudi, but decided not to oppose the sale when it became clear that their opposition would not halt it. "It took a few days for that to sink in, and then the sale became tolerable," a banking source said.
Pharaon said he had no intention of discriminating against any potential client. He said he will keep the bank's present management and will not become directly involved in the bank's operation. The board agreed today to accept Pharaon's nomination of his Houston-based attorney. Frank Van Court, as his representative.
Van Court is a member of the Texas law firm of Vinson, Elkins, Searls, Connally & Smith which includes former Texas Gov. JOhn B. Connally as a partner. Connally, who appears to be a potential candidate for the Republican presidential nomination in 1980 is a minority stockholder in the Main Bank of Houston, in which Pharaon is also an investor.